Labour piles on pressure over bid by IAG

A showdown over job losses and connectivity routes to Heathrow, as well as the development of Cork and Shannon airports looms in the proposed €1.4bn Aer Lingus takeover, as Labour TDs increased the pressure for a tougher deal.

Transport Minister Paschal Donohoe would not comment on an emergency move at the Labour conference which set stringent conditions on the selling of the Government’s 25.1% stake, as tensions between the two coalition parties over the future of the carrier continued.

Though the vote at the conference is not binding on the Government, it makes it extremely difficult for Tánaiste Joan Burton to agree to any sale without its conditions being adhered to.

Ms Burton insisted “the ball is now in IAG’s court” after the vote, and stressed that many TDs in Fine Gael were just as concerned about the bid as Labour is.

The British Airways- dominated IAG group is to meet with the Government this week to try to hammer out a compromise.

IAG chief executive Willie Walsh is expected to offer more certainty on job security and apparently will, vitally, give a commitment for more than just five years on retaining Aer Lingus’s landing slots at London’s Heathrow Airport.

Part of the concern from the trade unions, which represent employees at the airline, surrounds the prospect of IAG outsourcing ground-handling staff.

However, with Aer Lingus meeting union representatives over the weekend, the word is that union, as well as political, opposition to a deal may be easing.

IAG has claimed that it will generate more than 630 jobs and 2.5m extra passengers, by 2020, if it were to take over Aer Lingus, with it also, reportedly, promising to boost the airline’s cargo capacity by 50%.

The emergency motion passed overwhelmingly at the Labour conference in Killarney expressed serious concern that the bid failed to reflect the real value of the carrier.

The motion demanded a clear plan on how Cork and Shannon airports will be promoted after a takeover and the impact on the regional impact of a sale; an independent valuation of Aer Lingus assets, including its Heathrow slots; and guarantees that jobs will not be out-sourced, or compulsory redundancies imposed.

Dublin TD Brendan Ryan — who proposed the motion — insisted that the IAG bid was a bad deal for the country.

Dublin Central TD Joe Costello rubbished Mr Walsh’s claim he would not do a second deal, saying: “Already, Willie Walsh is doing the third bid.’’

Clare TD Michael McNamara said Aer Lingus was increasing in value which meant there was no loss in the Government holding onto the shares.

“One of the values of the shareholding is that Aer Lingus cannot be broken up into its constituent parts and sold off,” Mr McNamara told the conference.

A senior Labour source said that people were now “engaged” with the bid process and accepted that if this proposal fell, there would likely be another one soon.

Ms Burton refused to be drawn on a call by Siptu president Jack O’Connor for the Government to keep its stake while the rest of Aer Lingus is sold.

Fianna Fáil dismissed the move as “political posturing” and called on Labour ministers to publicly disown the deal.